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Market falls below 4700 as confidence fades

Australian shares closed near the day's lows as investors turned bearish in the afternoon and sold off miners and banks amid concerns about US debt ceiling talks.

The benchmark S&P/ASX200 fell 27.1 points, or 0.6 per cent, to 4690.2, while the broader All Ordinaries lost 25.8 points, or 0.5 per cent, to 4712.3.

Among the major sectors, materials and financials fell 0.8 per cent, while energy rose 0.6 per cent and telcos added 0.2 per cent.

CommSec market analyst Steve Daghlian said the Australian market defied negative overseas leads in early morning trade before gains were reversed in the afternoon.

‘‘It could have gone either way, but as the day progressed the market went from being slightly higher to around half a per cent lower and there didn’t appear to be one particular driver,’’ Mr Daghlian said. ‘‘At the end of the day we’re doing a bit of profit taking.’’

The local market is still sitting at its highest levels in about 18 months following overall gains of more than 1per cent since the beginning of the year.

However, Mr Daghlian said the US debt ceiling and upcoming spending cuts would continue to weigh on global markets.

Three of the four major banks were weaker. ANZ fell 24 cents to $25.17, Westpac finished flat at $26.28, National Australia Bank dropped 21 cents to $25.09 and Commonwealth Bank dived $1.23 cents to $61.37.

The Australian Industry Group and the Housing Industry Association also released a report showing activity in Australia’s construction industry has slowed for the 31st consecutive month, with the home and apartment sector remaining especially weak.